(5) Understanding the Drivers of State Environmental and Natural Resource Conservation Spending: Econometric Analysis of U.S. States

Yohannes G. Hailu, Land Policy Institute, Michigan State University, East Lansing, MI

Session: Poster session

With broader citizen understanding of the value of conserving natural and environmental resources on the one hand, and with increasing pressure on such resources from development of land for residential and commercial purposes on the other, there is increasing debate as to what responsibilities states have in conservation funding. From 1997 to 2004, there have been more than 1,100 referenda for conservation in state, county, and municipal ballots across the United States. In these referenda, over 75% have passed with large margins. This nation wide trend in voter preference for conservation may indicate demand for conservation investment. Conservation spending across the U.S., however, reveals significant difference across states, ranging from $552 per capita conservation spending for Wyoming to $17 per capita for Georgia. This poses an interesting question - what determines conservation spending given residents preference for it?

Studies in public finance suggest the role of state socio-economic and political factors as drivers of public spending. Based on this framework, the main goals of this study are to inquire the role of natural resource endowment, socio-demographic, economic and political factors in explaining conservation spending differences across states and to identify a conservation spending benchmark for each state. To achieve this, relevant data were collected from Census Bureau and each state’s budget office. An econometric model is estimated using the mentioned data. Results from our analysis suggest that conservation spending at the state level is not significantly driven by natural resource endowments, but rather by socio-economic and political forces in each state. The implication of this finding is that there is potential under-investment in conservation as current funding schemes are not sensitive to a state’s resource endowment. Identification of the drivers of conservation spending can potentially assist in understanding their impacts on conservation funding and in designing effective conservation policies.

Soji Adelaja
Land Policy Institute
Michigan State University
1405 South Harrison Road
East Lansing, MI, 48823, USA
Phone: 517-432-8800 ext 101
Fax: 517-432-8769
adelaja@landpolicy.msu.edu

Yohannes G. Hailu
Land Policy Institute
Michigan State University
1405 South Harrison Road
East Lansing, MI, 48823, USA
Phone: 517-432-8800 ext 112
Fax: 517-432-8769
yhailu@landpolicy.msu.edu